June 2022 Home Sales Report Weak Inventories Cause Home Sales to Fall and Prices to Rise in First Half of 2022 Date: July 18, 2022
June 2022 at a glance
Declining state inventories continued to hinder sales while driving home prices higher. Existing home sales fell 11.1% in June 2022 compared to June 2021, and the median price rose to $280,000, a 9.4% increase over that same period.
June is routinely the strongest month for sales in the state, accounting for 11.6% of annual closings in a typical year.
Sales in the first half of 2022 were 6.9% below the pace for the first six months of 2021, and the median price was up 10.2% to $260,000
Inventories continued to slide. New listings were down 13.5%, and total listings for the state were down 14.4% in June compared to their levels 12 months earlier.
Wisconsin continues to have a solid seller’s market, with months of available supply down 9.7% to just 2.8 months of supply in June 2022. Every region of the state had months of supply well below the six-month benchmark that characterizes a balanced home market. The tightest markets were in metropolitan areas, which had just 2.7 months of supply in June 2022, down from three months a year earlier. Similarly, micropolitan areas, which are counties with a population between 10,000 and just under 50,000, saw their inventories slip to 2.8 months of supply from 3.2 months of supply a year earlier. Only rural counties recorded an increase in supply, and that increase was marginal, rising from 3.5 months of available supply in June 2021 to 3.7 months in June 2022.
Homes continue to move at a brisk pace, with average days on the market falling 11.8% over the last 12 months, to just 60 days in June 2022.
Affordability was down by significant margins in June due to rising mortgage rates, rapidly appreciating home prices and unchanged median family income in the state over the past 12 months. The 30-year fixed-rate mortgage was 5.52% in June, up from 2.98% a year earlier, which is an increase of 254 basis points. The Wisconsin Housing Affordability Index measures the percent of the median-priced home that a buyer with median family income qualifies to purchase, assuming a 20% down payment and the remaining balance financed with a 30-year fixed-rate mortgage. The index indicates the qualified buyer could purchase 127% of the median-priced home in June 2022, but that is down from 182% just one year earlier.
Analysis from the experts
Housing Market Remains Tight
"We have historically low inventory throughout the state, which is limiting sales and driving up prices. Even in an environment of rapidly rising mortgage rates, demand remains strong, and homes are moving quickly. This trend is likely to continue, at least through the peak market in the summer."
Brad Lois, 2022 Chairman of the Board of Directors, Wisconsin REALTORS® Association
Expect Higher Mortgage Rates as the Fed Raises Short-term Rates
"Inflation is not yet contained as indicated by the preliminary June inflation estimate of 9.1%. The Fed is likely to increase its upward pressure on short-term interest rates to lower these strong inflationary pressures. A full 1% increase of the Federal Funds Rate is increasingly likely in the late July meeting of the Fed’s Federal Open Market Committee. While this will definitely increase mortgage rates in the short term, it’s necessary to prevent inflation from getting embedded in the economy and driving mortgage rates into the double digits as was the case in the early 1980s."
Dave Clark, Marquette University Economist and WRA Consultant
Demand Pressure Should Start Moderating by the End of 2022
"REALTORS® report the reduction in affordability has already begun to price some buyers out of the market. With mortgage rates on an upward trajectory, we expect the seller’s market to start to weaken by the end of the year."
Michael Theo, President & CEO, Wisconsin REALTORS® Association